Consumer debt is on the rise, and current household debt is at a record $13 trillion. This is a nearly 1 percent increase over the past quarter, which seems to be following behind the soaring stock market. However, massive amounts of household debt can be incredibly difficult to overcome, especially when a serious life change impacts income. For many South Carolina consumers, rising household debts can be best addressed through Chapter 7 bankruptcy.
Many consumers in compromising financial positions are there due to subprime auto loans. These loans are for consumers with credit scores of 620 or lower, and many of these loans are delinquent. These loans are made directly through car dealers and other auto finance companies, as bank auto loans are typically only made to consumers with higher credit scores.
Bank auto loans have decreased in delinquency rates over recent years, whereas subprime delinquency rates have gone up. Consumers who are already in precarious financial situations — particularly those with credit scores at or below 660 — are being hit the hardest by delinquent loan payments. While the $435 billion in outstanding subprime loan are not expected to have a meaningful impact on the economy, these past-due payments are still likely to profoundly impact debtors.
Delinquent loans, overdue payments and other past-due bills can be devastating to a person’s financial security. Many people in South Carolina do their best to make good on their debts, but interest and penalties on top of already hefty payments can be impossible to overcome. Chapter 7 bankruptcy can be an effective tool to handling these types of overwhelming debts, and most people can secure a brighter financial future with this process.
Source: Forbes, “U.S. Household Debt Reaches Record $13 Trillion: Watch Subprime Auto Loans”, Zack Friedman, Nov. 14, 2017